Shakespeare's work should be appreciated as complex art as well as marketable entertainment, says Kate McLuskie. Whereas Tom McAlindon believes that theory-driven radicals are sapping the joy from the Bard's vision

Just before last week's announcement of a ?30 million cut in arts funding, the Arts and Humanities Research Board hosted a seminar at which Estelle Morris, the Arts Minister, Neil MacGregor, the director of the British Museum, and broadcaster Joan Bakewell debated Government and the Value of Culture.

The discussion was triggered by the publication in May of Culture Secretary Tessa Jowell's personal statement on the subject. The paper was a welcome move in government thinking away from an instrumental approach to culture, its contribution to the economy, its role in social inclusion and the prevention of crime. It offered a commitment to what Jowell called "the complex arts" - cultural production that "makes demands not only on the makers or performers but on those to whom the work of art is directed".

In the debate, Morris emphasised the autonomy of art and located its effects in the private world of personal taste and life-enhancing individual experience. But she acknowledged that the discourse of value for money and identifiable social good is the only one recognised by the Treasury. It was left to MacGregor to insist on the civic and public role of culture. He reminded the audience of the British (as opposed to Royal) origins of his museum and spoke passionately about how its artefacts have the capacity to change their meanings depending on the contexts of their display. For example, the recently acquired Abyssinian tablet was displayed nationwide in the context of the Iraq War. He also highlighted the museum's role in education and access, signalled by kids queuing up to learn how to write "fuck off" in cuneiform at a workshop in Newcastle.

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There was much talk of the difference between "art" and "culture" and moving accounts were given of disadvantaged youngsters whose creativity was awakened by access to musical instruments or the chance to work in ceramics. Yet everyone ducked the question of value, and left unasked were the hard questions that the arts settlement will only make harder, of priorities, principles of selection and the relationship to the market.

The only artworks referred to were objects. Shakespeare is the default signifier of complex art and duly got a mention in Jowell's paper. But the great literary production of the past is harder to fit into the terms of the debate as it is currently constituted.

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For those of us who work in and on literary culture, the question of how to identify and sustain this complex culture is vital. Recruitment into English studies remains buoyant and Shakespeare remains a mandatory part of the English curriculum.

But it is less easy to define the value of Shakespeare, as there is no agreement about what Shakespeare is. For many people, their most exciting experience of Shakespeare remains their own performance as Dogberry in an amateur show or an evening at the theatre where the design and performance or iconoclastic adaptation blank out any relationship with complex historical art.

In the current climate, it is difficult to establish the appropriate terms of difference between advanced study and research in Shakespeare and the experience of theatre groups or theatregoers. In part, this is because we are nervous of the charge of elitism. But the question of which activities should receive state funding - whether from the Department of Culture, Media and Sport or the cash-strapped education budget - will not go away.

Invoking a simple opposition between the market for the arts and the complex work that requires subsidy will not help. The same work that requires extensive subsidy in the theatre can be reproduced in a commercially successful film or provide the core of the lucrative backlist for multiple competing editions across the publishing industry.

Those oppositions between transcendent literary value and the demands of the marketplace were established by Shakespeare and his contemporary playwrights when they were developing the first commercial theatre in England. Strictures about the groundlings, who were capable of nothing but dumbshows and noise, occluded the importance of the same groundlings'

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payments in sustaining the public theatres. When Alexander Pope complained in the 18th century that Shakespeare's desire for "gain not glory" constrained his art, he failed to acknowledge that universal copyright protected the valuable intellectual property of his edition of the plays.

At the AHRB, much was made of Jowell's paper representing a "swing of the pendulum" back from an instrumental approach to culture to one that insisted on intrinsic value. But pendulum swings tend to retrace the same trajectory and do not allow for any forward movement. We might be better advised to project a triangular dynamic between costs and value and also innovation.

When Shakespeare and his fellows deplored the effect on art of an ignorant market, they usually did so in the interests of the kinds of innovation they had brought to the theatre of their time. Ben Jonson was characteristically sarcastic about those whose love of old plays showed that their judgement was constant "and hath stood still these five and twenty or thirty years".

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Espousing innovation as one of the values that needs to be supported would not mean abandoning old works. I am delighted to see the literature of the past become the literature and theatre of the present, to see old meanings become new and old articulations of recurring social and psychic conditions tested under new pressures.

Bringing innovation into the debate provides a way of distinguishing between the play that has been cut to meet a restricted attention span and one that has been cut so its deep structures stand out more clearly. It would support those whose love of Shakespeare produces an active engagement with his complexity and its potential impact on a complex society. It would not prevent the market, or a different government budget, from providing, without any sense of denigration, for those who have other uses for his and other artists' contribution to culture.

Getting agreement about what constitutes the special value of innovation will require extensive public discussion. Jowell's paper and the ensuing debate is an important part of that process. She was right to assert that the values of art are incommensurable with the costs of cultural policies, but linking them via innovation may ensure that art is renewed outside the market, and the market will, in time, benefit from the ability of art to fuel its need for constant innovation.

Kate McLuskie takes up the post of director of the Shakespeare Institute in January.

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